China's grain production is high, inventories are high, and imports are high; how can the "three highs" contradiction be resolved?
Recently, the "2016 (Fourth) China Grain and Food Security Strategy Summit" was held in Beijing. At the meeting, when discussing the recent report by the British magazine The Economist that "China ranked 42nd in the 2015 Global Food Security Index," experts pointed out that at present, China's food security situation is basically in a good state, but the contradiction of high domestic grain production, high grain inventories, and large grain imports coexisting still troubles food security. In response to these security threats, we will continue to adopt measures such as supply-side structural reform and strengthening investment in agricultural production technology to fully safeguard China's food security.
The "three highs" contradiction still exists
As this year's grain production data is about to be "released," outside discussion about China's grain production and security has also begun to increase. He Weida, head of the Department of Economics and Trade at the School of Management, University of Science and Technology Beijing, pointed out in an interview with this newspaper's reporter that at present, social attention to China's grain issue still mostly falls on the "three highs" problem, namely high domestic grain production, high grain inventories, and large grain imports. In particular, the contradiction between high production and high imports is especially "eye-catching."
Data show that in terms of production, in 2015 the national total grain output was 621 million tons, exceeding 600 million tons for 3 consecutive years and achieving "twelve consecutive increases"; in terms of inventories, corn inventories currently exceed 250 million tons, with severe oversupply; in terms of imports, over the past 5 years, soybean imports have increased year by year, and the five-year average foreign dependence rate reached 83.8%. In 2015, China imported 81.69 million tons of soybeans. Including edible oil and grains, China's grain imports exceeded 120 million tons.
He Weida pointed out that the main reason for the "three highs" problem lies in the imbalance in the structure of grain production. For a long time, we have placed relatively more emphasis on producing wheat, rice, and corn, while soybean production has been relatively weak and has gradually become a weak link. Moreover, China has a large population, and demand for grain continues to increase, which in turn creates a gap between production and demand.
Hu Dinghuan, a researcher at the Institute of Agricultural Economics and Development of the Chinese Academy of Agricultural Sciences, said that the costs of grain production, land use, labor, and agricultural materials are continuously increasing. Grain prices in the international market were already lower than ours, and have recently been falling further. The huge gap between domestic grain prices and imported grain prices has also triggered an increase in market imports.
The security situation is not optimistic
Under the impact of the "three highs" problem, how exactly should we understand China's food security? He Weida pointed out that first it must be made clear that China's food security situation is still basically in a good state. At present, China's grain production has achieved "twelve consecutive increases," and grain has long remained in a state of bumper harvests. The amount purchased and the inventories have also been climbing accordingly. Market grain sources are very abundant, and grain demand in all respects has been continuously and reliably guaranteed.
"But basic security does not mean we can rest easy, especially considering that the foreign dependence rate of products such as soybeans remains high, and the structural contradiction in the varieties of grain produced has still not been resolved. At the same time, considering our large population and continuously increasing grain demand, these all pose no small challenge to our food security," He Weida said.
Hong Tao, dean of the China Food (Agricultural Products) E-commerce Research Institute, pointed out that at present, the security situation of China's grain industry is not optimistic: wheat is basically secure or weakly secure; rice is basically secure or weakly secure; corn is oversupplied and not secure. The import rates of edible oil, peanuts, and soybeans are too high and not secure.
A relevant official of the State Administration of Grain pointed out that in addition, cultivated land, freshwater resources, effective agricultural labor, and the carrying capacity of the ecological environment all impose rigid constraints on grain production, and these rigid constraints are becoming increasingly prominent, making further increases in grain output more difficult. China's food security will also face the dual challenge of rigid growth in consumption and hard constraints on production for a long time to come.
Supply-side reform makes another push
Although facing a series of challenges, China still has the ability to safeguard food security. Experts pointed out that China is currently advancing supply-side structural reform and has also made many efforts on how to improve the international competitiveness of agricultural products, forming many important ideas and policies. For example, the recently proposed "separation of three rights" for agricultural cultivated land divides land rights into ownership rights, contract rights, and management rights, thereby promoting the leading role of appropriately scaled operations, expanding the area of cultivated land, reducing grain production costs, and increasing farmers' incomes and enthusiasm for growing grain.
Li Wei, director of the Development Research Center of the State Council, pointed out that in the process of advancing supply-side reform, we should give full play to the role of resource allocation, improve the structure, let supply and demand determine prices, let prices truly return to the market, and guide farmers to adjust the agricultural production structure and agricultural product structure according to market demand. It is understood that in recent years China has carried out many meaningful attempts. In 2014, the state launched** pilot reforms of target prices for cotton and for soybeans in Northeast China and Inner Mongolia. In 2015, the state also abolished the temporary storage policy for rapeseed and at the same time launched corn price reform.
"In order to continuously improve the ability to respond to threats to food security, three areas of work should also continue to be done well: first, the government should further increase support for 'agriculture, rural areas, and farmers' and strengthen fiscal and financial support; second, while ensuring sufficient production of wheat, rice, and corn, appropriately adjust the structure of grain production and increase the production of products such as soybeans; third, strengthen investment in science and technology in agriculture and grain production and continuously improve grain productivity," He Weida said.